Hypothesis: CS/CX in Small Businesses and Start-Ups

After my recent post on the benefits of CS/CX, I had challenges presented to me that suggested that CS/CX is often viewed as a function of larger businesses, and that it isn’t feasible for start-ups or small businesses to support Customer Experience. At Two Tree Solutions, we believe just the opposite:

VALUE OF CUSTOMER SUCCESS

Customer Success (CS) can significantly benefit small businesses and start-ups without incurring additional overhead costs, because the core principles of CS closely align with traditional sales activities that startups and small businesses have to focus on anyway in order to get off the ground. By integrating CS practices into the existing sales processes from their earliest days, businesses develop the mindset and the processes that will  drive more consistent growth, enhance customer satisfaction, and foster long-term loyalty, all while maintaining lean operations and reducing risk.

Prioritizing CS is not just possible for start-ups and small businesses, it is a necessity when setting up a business for growth. Let’s start with two common themes of CS and sales:

• The underlying premise of any start-up is that the business has something of value to offer the market, in exchange for money and market presence. Customer Success’s entire reason for being is to ensure that that value is delivered AND realized. 

• In order to sell a product that has little or no presence in the market place, sales teams  must be laser focused on understanding prospects' needs and showing the prospects how their (new) product meets those need(s). CS continues this needs-based focus after the initial sale in order to increase retention likelihood and cross/upsell opportunities, as well as to create customer advocates that can help spread the word about the new product in the market place.

The common themes of both new sales and cross/upsell opportunities are undeniable, but the CS function is frequently relegated to post-contract sales, and for better or worse, most small businesses feel more pressure to grow their customer base than to take care of their existing book of business, so CS tends to be an area targeted for a later date, “when we get there.” However, this delay in implementing a strong CS focus is potentially risky, especially for businesses in their early stages: 

• As businesses grow they reach the growth stage that requires cash in-flux. That cash typically comes with some strings attached, often in the form of growth goals that emphasize revenue over customer value. However, those revenue goals/expectations aren't always related to either business capacity or capability. When target goals are driven by expected company valuations and not what your portfolio of customers can provide, failure to achieve revenue goals becomes an all too-frequent outcome.

• Further, when goals are unrealistic, sales teams have no choice but to double down on any and all methods available to sell, including trying to create a need or demand on behalf of the customer, in order to have them buy something they don’t need, or don’t need yet. This leads to existing customers feeling like they are being sold to rather than having their needs met, a scenario that often results in churn.

• Finally, and even more debilitating from a customer perspective, because revenue has been prioritized over value, customers no longer feel supported when they try to create more value from what they have already bought. 

Unfortunately, these issues reflect a stubbornly pervasive Inside-Out perspective, focusing on sales revenue, rather than the more effective Outside-In perspective, focusing on delivering value to meet customers' needs. Time and again we have seen across a myriad of markets and industries that CS/CX-led businesses outperform CS/CX-lacking businesses, which implies that the changes made by cash-strapped start-ups in how they sell have not served them well. It then begs the question “Should the new business sales model change to better align with the CS value-driven sales model?” It is entirely feasible to promote the theory that new business sales too frequently lose sight of what they were charged to achieve when the business was born, and need to come back full-circle in order to give the business the best chance at long-term success.

VALUE OF CUSTOMER EXPERIENCE

While Customer Success is a proactive method for realizing customer value and success, Customer Experience is the delivery and improvement of customer interactions with the business/ brand. CX relies heavily on customer feedback to improve and keep up with changes/trends in customer expectations of a brand relationship. 

For any business—especially startups and companies launching new products or services—getting the experience right the first time is critical. Every customer interaction shapes their perception of the brand, influencing feedback and subsequent interactions. This, in turn, defines their overall experience and ultimately determines whether they stay loyal or leave.

What this means for any business is that the longer you wait to understand the customer experience with your brand through the many inter-related interactions they have, the more risky it becomes that a customer is readying themselves to move on.

There is research (by PwC, Zendesk, Salesforce and Hubspot) that indicates that, in today’s experience economy, customers will leave a brand:

• 17- 42% of the time after just one bad experience, and 

• 70-92% of the time after 2 or more bad experiences.  

For startups and small businesses trying to break into the marketplace, this means there is little room for error. With so many possible interactions with a brand, ensuring a seamless, positive Customer Experience from the very beginning is essential to driving retention and long-term success.

FINAL THOUGHTS

Let’s close with this final thought regarding the applicability of CS/CX concepts and tools in start-ups and small businesses, by asking you to consider this: 

• If a new/small business struggles with customer retention (due in part by the issues raised above), that means that those businesses have to raise their new business sales goals to not just cover its part in growth, but also to replace the existing (and future) revenue lost by the churning/leaving customers.

• Further, by building a new business on a faulty customer base (i.e. with a high risk of churn), then that new business has introduced more risk into their customer portfolio than is absolutely necessary.

• Put another way, the quicker a new business moves to a place where existing customers make up a majority of revenue in the business, the sooner that the revenue portfolio becomes less risky, because customers stay longer and also buy more (on their terms/needs).

For small businesses and start-ups, integrating Customer Success and Customer Experience into the business model early offers a cost-effective strategy to enhance customer relationships, drive growth, and build a sustainable business model without the need for extensive additional overhead. By training sales sales teams to adopt CS methodologies, the need to create a separate CS department can be avoided. Many of today’s CS technology tools can also streamline CS and CX efforts with limited investment. 

More importantly, CS-/CX-led startups can grow their business on a more stable client base that lowers the overall risk to revenue. Customer Success strategies can help the business evaluate prospects to ensure that they best fit the company’s ideal client profile (ICP). That, combined with health monitoring, CS Plans, and QBRs/EBRs can minimize churn risk. By reducing churn risk and increasing retention, new business wins are not filling revenue gaps left by leaving customers, ultimately accelerating growth while lowering the overall customer portfolio risk. Satisfied customers who have been provided positive Customer Experiences are more likely to stay make additional purchases, upgrade services, and refer others, driving organic growth.

Adopting a strong CS/CX framework puts small businesses on a stronger customer foundation, clearing the way for faster, safer, and more sustainable growth.